This is the time of year when many boards and associations will be holding elections for their boards of directors. Historically, participation by members in such elections has been low. There are many reasons for this, but one is undoubtedly that members do not believe their selection of directors makes a difference for their board or for their own business. Nor do they believe that the board itself is helping to shape the industry or, at the very least, helping its members to adapt and thrive in it. Unfortunately, in some cases, they are correct.

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After 40 years as an elected or appointed director, member, trustee, president, treasurer and secretary on numerous boards (including real estate and school boards), associations, charities, community and non-profit organizations, I have come to believe that the fault lies in the manner in which such organizations are governed.

Good governance requires the ability for your board of directors to establish missions, strategies, targets and goals. The board then refers these components to management, who are expected to find the best way to implement/achieve these on behalf of the organization and its members. At a high level, this governance model and resulting structure makes sense and should be prescriptive in how a well-functioning board of directors governs the organization.

The board sets the objectives and then directs and empowers its sole employee, typically the director or CEO, to take the necessary steps to achieve such ends. The CEO is expected to harness the collective resources of the organization – staff, funds, knowledge, equipment – to work towards the desired outcomes.

There are ways of determining for yourself if your board (both the board of directors and your real estate board/association as a whole) are effective.

A core expectation of members is that the MLS functions properly and is always available. To this end, staff handle MLS services effectively and allow us to buy and sell property on behalf of clients.

However, effective management of the MLS is a core function and should not form the basis by which to evaluate your directors and CEO. This, and most essential and daily board functions, are handled effectively by the staff of the association and would continue effectively without any involvement of the board of directors or CEO.

The essential questions to ask are whether your board is adopting policies and formulating strategies that will prepare your association for the future and whether it is enhancing the overall services and support to its members.

Are you, as a member, better off as a result of the actions of your association now than you were one, two, three, 10 years ago? Do you feel confident that the association is leading the industry, thus ensuring our collective success? These indicators are the hallmark of effective boards and CEOs.

You should also obtain a copy of the association’s multi-year plan and examine it to ensure the goals are strategic and that the indicators or targets that are associated to the goals are measurable. If they are, inquire about the progress made against the set targets. Were they achieved? Why or why not, and what has been learned along the way?

Too often, we find ourselves immersed in our everyday business, without recognizing the value that a galvanized association can bring to our businesses and their profitability.

If you take the step of researching your board’s strategic plan, you will find one of three results. One is that your board does not have a strategic plan – this is a BIG problem and suggests that your board of directors and CEO are not effective in that they have left their members vulnerable to industry and external market forces.

If you find that your board has a strategic plan but the major items on the plan are irrelevant to you as a member or are inconsequential “motherhood” statements that sound lovely but have no actual meaning or planned outcomes, then you can be equally sure that your board of directors and CEO are not effective. Again, such an approach leaves their members vulnerable to external forces and disruptors.

If you find that your board has a plan that is meaningful to you as a member and has objectives that are stated in terms of real goals, the means of achieving these and a time frame for doing so, then you may have an effective board of directors and CEO. Further, you should have access to reports that will demonstrate if the targets have been met. Have a look at your board’s strategic plan for the past couple of years and ask if these objectives have been achieved or are well underway. If you are satisfied on these fronts, you are being well served by your association. If not, then you revert to your board and CEO not being effective.

Why are strategic plans often ineffective? Frequently it is because such plans do not have worthwhile goals or do not state these in meaningful terms that allow for measurement and analysis of progress towards the goal. There are experts in the market who can help associations formulate and achieve a powerful strategic plan whose value makes a difference to your bottom line.

Even a good strategic plan cannot stand on its own. It is supported by a work plan, CEO performance system and dashboard. These components are typically outlined in the association’s governance plan.

If the board of directors is using its governance model correctly, it will set a meaningful strategic plan, establish performance objectives for the CEO based on the objectives outlined in the strategic plan and then evaluate such performance in light of the goals achieved (stated in time frame of outcomes). In turn, the CEO’s performance plan will cascade down to the staff level, so that the entire association is aligned and driving toward the same desired outcomes. Members are entitled to expect this level of performance from its association. Anything less ensures that the association will not be effective.

How does a governance model fail to lead to meaningful outcomes for its members? There may be one of more reasons for this:

1. There is no meaningful strategic plan

It does not have objectives that matter to members or if it does, these are not stated in terms of what is to be achieved and by what date.

2. The board allows the CEO to co-opt the system by not having meaningful goals that can be measured and evaluated to achieve the desired outcomes

Another symptom of this is having objectives such as, “Prepare a report about XYZ,” rather than recognizing if this is a step towards achieving the actual goal.

3. Objectives are so vague as to defy measurement

Common examples are, “Serve the ongoing needs of members” or “Establish relationships to enhance access to data.” While these statements are lovely and fill the colourful boxes and diagrams of many so-called strategic plans, they do nothing to move the organization forward in actually achieving anything. Even worse, they do not allow for effective evaluation of the CEO in that there is no way of actually determining if these objectives are met.

Thus, they are the favourite type of statement for those CEOs who we consider as “survivors” – those who simply exist from year to year without actually doing much beyond managing the ongoing day-to-day functions of the organizations. By avoiding meaningful goals, the CEO has ensured his or her “success” because there are no targets to miss.

4. Boards are more concerned about “ticking the boxes” in their governance plan than ensuring the various and necessary steps are being articulated and performed in a meaningful way

For example, even if the goals set are irrelevant or otherwise hollow, the directors can still check off the box that states, “establish goals.” All steps beyond this – set targets, measure CEO performance – automatically become useless. The CEO however continues to “prosper” and receive bonuses because no goals remain “unmet.” If this is what is occurring at your board, are the members really being served or does the system continue primarily for the benefit of the board and CEO?

5. Boards are unwilling to hold the CEO to account, often because they have worked closely and have come to like or empathize with the individual CEO and will address concerns “next year”

Even CEO evaluation systems rarely allow for anything less than “acceptable” performance but are typically geared to obtain higher goals that result in bonuses, even if nothing of substance has been achieved in terms of strategic objectives.

If your board continues to hire a series of consultants to attend board meetings and revise governance plans, you can be assured that your board is not effective. Bringing in a new consultant typically allows a non-performing CEO to hang in for at least two or three more years as the system is revised, normally with outcomes no better than before.

What then is the solution? It comes down to one key element – accountability.

Accountability of the directors to establish and set meaningful strategic plans. Accountability of the board to constantly evaluate whether these goals are being met and accountability in terms of being both able and willing to hold the CEO accountable for achieving the objectives.

As dues-paying members, you are entitled to a high-performing board and you are entitled to the fruits that come from having a high-functioning board and CEO at your service. In fact, the very future of organized real estate may depend on it. Our role now is to elect an effective board of directors willing and able to do the work that is necessary to achieve this.

19 COMMENTS

  1. Perhaps just one more thought. Directors of ORE are volunteers. Unpaid, but with the perks of paying for you to attend conferences….sometimes significant costly conference and training sessions that are geared to the REALTOR® role and not the director role. Some directors may be paid, in some ORE situations, usually the officers who must give significant time. But ask yourself, a well run organization should not require such time…after all there is a CEO skilled or should be skilled at managing the association. How are directors ever to be accountable, if they act in a manner inconsistent or falling below a standard, because they are volunteers everyone wants to protect their reputation, well unless they are unliked. There is no consequence associated with not adequately performing the duty. So there can never be accountability no matter how much you try to install it. One board has had and spent considerable dollars …nearing a half million and is no further ahead. It is our money that has gone to this cause, we should be outraged but we will never know the true story to be outraged about. And if you tell the story, or repeat the problem you become the problem. Too much collegial nepotism in the system to ever get it to work best for all concerned.

  2. I saw a board (won’t say who) hire a consultant who really knew what he was doing. He scared me to death because he not only helped us to a strategic plan, but he knew how to make us accountable. At first, I was afraid to come to work. It was different and we were going to actually be expected to do useful and challenging things. He had a good way of making us feel safe too. I began liking what I heard and I was still scared to death, but excited too. I would come home and tell my husband about my work, for the first time in a long time. It was a nervous but good excitement. I guess he hit too close to the accountsbilty word because suddenly the ceo and board chair got rid of him. It was awful and my sense of excitement disappeared. I still think how interesting my work would have been if they would have kept him. I was embarrassed by the way it ended. I hope this article is paid attention to

    • Hello W. Johnston. Could you please contact me. I would like to compare notes as your experience is one that many others have also experienced and perhaps we can find a way to address such issues. Bob

  3. Thank you Bob and REM for an actually relevant, researched and on-point article. Please keep them coming!

    Sadly as a volunteer I can say with full confidence this will fall on many, many deaf ears. Even though the logic and structure described in the article are sound, they will most likely be either overlooked, or outright denied by sheer ignorance (sorry, but true); or in the worst case, understood but swept under the rug.

    And this is not to say I’m pessimistic, just my experience so far. So oft the response is ‘if you don’t like it, volunteer!’ And despite good intentions, unfortunately that advice is more of a ‘come drink the kool-aid I don’t really realize im drinking.’

    There is a LONG road ahead and I’m going to stay hopeful that articles like this one, and similar stories will continue to be shared and cause a moment of pause in enough dues-paying members to instigate a call to action. Perhaps then this tragically underused and leached-upon resource of organized RE will start to give back something meaningful besides a ‘pretty decent but certainly not excellent’ MLS.

    • Dan, there is a long road behind that at one time was the long road ahead. Wishing and hoping and believing are welcomed attitudes; they cannot achieve results without action…..elect directors not fellow members to achieve results.

  4. Well stated, and there is likely more thoughts to add. Experience suggests there is little hope of correcting the inefficiencies, the ineffectiveness of the NPO Boards without a significant revolution in context and governance. We waste more time on the unimportant yet seemingly urgent matters and so little time is focused on long term strategic approaches. ORE is more of a disappointment, a system that gets in the way, and a system that is tolerated because our individual need to succeed is not going to be enhanced by the time it takes to make ORE a better tool for the outcomes we seek. For every one of us who seek to improve for the common good, there are a hundred roadblocks in front of the end goal. What a shame.

  5. The mantra slogan from our board is, “if you don’t like it, you should start to volunteer. “
    Basically stating, if you’re not volunteering at the board, you have no right to speak out. If you’re not a volunteer, you should have no voice in the organization. You have no rights as a member. How dare you question what we are doing.

    And many members believe this is true, so they say and do nothing. I volunteer quite a bit on other things that have great importance to me, like my children. I do not have time to volunteer on my real estate board. That should not mean I have no right to have a voice.

    With this article, clearly shows that we do have a voice, and we should be speaking, volunteering or not.

  6. Very well stated Bob. Not just for Real Estste but other boards as well and unfortunately for almost all service clubs.

  7. I was very hopeful when I saw the RHAB strategic plan online. It sounded brilliant. But I don’t see anything happening. Your instructions to seek measures is very good but I don’t see any. To follow?

    • Hi Brian, Herein lies the problem. Words without measurables, deliverables and dates are often just words. You have hit on the crux of the problem that many organizations experience. Accountability is key and without measurables, how do we know what the goal is or when it has been achieved.

  8. Well stated Bob.

    For everyone like you there are a hundred like those described as being ineffective. Thus, the timeliness of your article. Human nature being what it is, nothing much will change at the board levels. Inertia is a powerful damn against change, and boards are chock full of inert types who love the positions of power without actually wanting to stick their noses out and take chances that might result in their own detriment. Status quo’ism sets in, as I am sure you know all about. So the problem persists. What to do about it?

    Set term limits? But that would entail the lifers voting for their own demise. Randomly appoint personnel from the trenches? But who would make up their lost income? Who would want the job? Make wannabes take a psychological exam to determine their personality disorders? I don’t have an answer, because when I was interested in those types of positions it was because i wanted to tell others what to do according to what I thought to be correct under the circumstances…which would make me a dictator of sorts. Now that I’m retired, older and verging upon wisdom, I don’t want to be bothered with that kind of immature power grasping behaviour. Maybe hiring retirees is the answer…those who have no skin in the game and for whom doing the right thing for the paying members is paramount.

  9. Very insIghtful and timely. It was an ah hah moment for me. Being a younger agent in Hamilton, I never understood why their is nothing much happening at the board level. Are they even working?

    • So often, we can be busy being busy, without actually seeing real results. This is true of boards of directors and CEO’s as well. If the Governance system does not lead to meaningful results than it is not being used correctly.

    • To ensure your Association is working get involved. Attend the AGM’s, attend events hosted by your association such as trade shows or Townhall Meetings. Volunteer for a Committee. As a member of an association you can make a difference.

      • You can make a difference as a committee member but you have to be very tenacious because for every one of you trying to change things for the better there are 2 who are there for the coffee, sandwiches and as friends of the elite.

        I recall after a board event that was to prep delegate particpiants to the provincial AGM I was speaking with a couple board director lifers, one declared “the membership is stupid” at a dinner event prior to the meeting and in contravention of protocols, the then president stood up and told the delegates to vote for so and so at the next morning’s meeting.

        It is that attitude that keeps the system a tight little old boys and girls club and ineffective.

        • Yes there can be Politics played at certain levels of Governance in the Real Estate Industry. And you mention “Director Lifer’s” . Both of these are good reasons for an individual to get involved. Quite often these lifer’s are the result of others not stepping up to the plate. Having said that these lifer’s bring a wealth of experience and knowledge that is important to an Association. In my experience most are willing and want to share this knowledge and experience with new people wanting to take the reigns. This is difficult as in my experience many members are great Arm Chair Quarterbacks. Sitting back and criticizing but no desire to get into the game. And an Association is like watching someone treading water. You see their heads above the water but never see what is happening below the waterline. By getting involved you will have the opportunity to experience the work and dedication that goes into running an Association.

      • Gary, involvement alone is not the answer……there are many REALTORS® with tremendous contributions to the craft, and do not have the experience, instincts, knowledge and ability to govern an NPO that is, for all intents and purposes, a business. ORE is not something you govern simply because you are a member. Being a REALTOR® and being a director are distinct roles, each requiring independent applicable skills. ORE needs governance in the order that major incorporated companies use, and we ought to be finding ways to ensure members are served as if shareholders and not as NPO members. IMO.

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